The Comprehensive Financial Advisory Committee – a group of citizens appointed by the town council to conduct an independent review of the town’s capital and operating spending plans – has praise for what it calls an “ever-improving budget document.”

In its annual letter, delivered June 1 to Council President Fred Chirigotis, the committee takes that “ever-improving” seriously, laying out areas for further polishing.

First, the praise: “The budget [for the fiscal year beginning July 1] preserves important Town services and does not require any personnel reductions in spite of stressful economic times and tenuous state financial assistance. The continuing positive stance of the rating agencies with respect to the soundness of the Town’s finances is due, in large part, to [Finance Director] Mark Milne’s efforts and professionalism…”

Then the suggestions: revenue estimates may need to be a bit more conservative. Program performance measures, for departments to discover “exactly what the residents and taxpayers of the Town are ‘buying’ with our tax dollars,” need a push. With minimal revenue growth likely for years, the operating budget’s reserve requirement of 4 percent should be reviewed with an eye to using a portion for necessary capital projects.

The sequestering of health care costs in a single line item rather than by departments, new this year, may make retroactive comparisons of spending more difficult. With only $25,000 in PILOT (payments in lieu of taxes) revenues expected from non-profits in town, agreements for non-cash services to offset operating costs should be considered. And with the tax levy for the community’s independent fire districts rising 21 percent between FY 2008 and FY 2012 while the town’s going up 13 percent, perhaps legislation should be filed to cap the districts’ levy limits – one suggestion of several that include consolidation into one town-wide fire and one water district.

More information is needed for enterprise funds to depict net assets and surpluses employed to subsidize user costs. The enterprise fund for the Hyannis Youth & Community Center should be terminated, as the Center cannot be expected to develop a revenue stream sufficient to pay debt service on construction bonds. Also, the council needs more accurate revenue estimates from Barnstable Municipal Airport.

The initiative to increase school enrollment may realize some gains, but “the Committee does note that in eleven years, at the current rate of student attrition, the school population will be one-half of its highest point in 2003.” Marketing should go “hand in hand with the politically long and demanding process of discussing regionalizing the Barnstable school system with one or more adjoining Cape Cod communities.”

Whether the council will respond favorably or at all to the above recommendations will become clearer at its June 7 budget meeting; a special session may be called for June 14 if work is not completed next week. In its report, CFAC thanks the council for adopting its earlier recommendations to publish a summary budget and develop a performance measurement program town-wide.

The committee works in a non-confrontational way with finance director Milne, who joined members at their May 29 meeting for a discussion of the recommendations. He advised against lowering the operating budget reserve to free funds for capital projects.

“The 4 percent is really on the side of under-funded for a reserve,” he said. The state and bond rating companies “would like to see more reserve, 8 to 15 percent.”

The town’s reserves are “actually higher than 4 percent,” he said, including the stabilization fund. He estimated the percentage as between 12 and 15 percent.

“I don’t think (a decrease in percentage) is a step in the right direction,” Milne said. “If anything, we should increase it.”

Members and Milne agreed to disagree, with Bob Ciolek saying, “The biggest issue the town has is capital needs. I hope Mark and his staff find ways to free up” resources."

CORRECTED Milne explained the reasoning behind putting all departments’ employment benefits costs in a single location, amounting to just over $18 million. This will give management and the council a better handle on the scope of the expenses, especially in the coming year when the town’s medical benefits package will get a thorough review.

To assist year-to-year comparisons, Milne proposed creating a “crosswalk” in a budget appendix that would allow such costs to be tracked by departments.